How To Retire Overseas

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Seven Critical Questions To Answer Before Planning Your Retirement Overseas

When we convene in Scottsdale, Arizona, next month with our top experts and expats from around the world for our Retire Overseas Conference, we’re going to draw from all the assembled wisdom to address the seven critical questions associated with conceiving, planning, and executing a move to another country.

Specifically:

#1: How much money do I need to retire?

Merrill Lynch claims you need US$5 million to retire young. In running the numbers, Merrill (like other conventional planners) assumes you’ll continue your free spending. The problem with this approach is that you’ll wind up working forever.

Our Retirement Planning Correspondent Paul Terhorst, a perpetual traveler who (along with his wife Vicki) retired nearly three decades ago at the age of 35, figures you need less than the Merrill figure–much less. That’s why we’ve asked Paul to lead Workshop #1: Retirement Planning–Get Your Finances in Shape.

What if you had just 12 months to get your financial affairs in order for a move overseas? What would you do? Paul and the other experts leading this critical opening session in Scottsdale next month will walk you through finding an answer to that question. They will show you:

  • How much money you need to retire and move abroad…
  • What to do if your retirement fund is on the skinny side…
  • How you should invest (for the short- and long-term) to maintain a healthy portfolio (considering the “three pots”: gold, property, and paper)…
  • How to manage your day-to-day spending (complete with budget spreadsheets). (Spoiler: You need to spend according to your assets, not your income.)…
  • How to cope with changing exchange rates (and diversify in a number of currencies)…
  • The best time for you to start taking Social Security (whether to start at 62…or wait until 66 or beyond)…
  • Why you should consider leaving your credit cards at the border–and what to do if you can’t move without them (plus, the best banks to do business with overseas)…
  • Whether to sell or to keep your U.S. property…
  • How to survive future crashes overseas…
  • What to do if the U.S. dollar tanks…

You’ll walk away from this workshop with ready-made spreadsheets and formulas you can apply your own data to. Just plug in your numbers and get the projections you need to sort your financial health and plan for your financial future overseas.

#2: Should I rent or buy a home for my retirement overseas?

No question, you want to rent first. We recommend for the first three to six months at least. You won’t be able to get a true feel for a place until you’ve spent at least a few months getting to know the layout…the neighborhoods (and neighbors)…how noisy it is at night (and in high season)…the day-to-day costs of living…how easy it is to travel around (and get back to the U.S. if you need to)…and so on. 

However, sometimes, depending on your situation, it can make sense to rent long term, as well.

Even renting, though, in a foreign country can be more complicated than you might be prepared for. And, if you do decide to buy, you need to understand how to navigate foreign property markets. That’s why we’ve planned Workshop #2: The Property Question. The panel for this discussion will feature global property experts Lief Simon and Lee Harrison, among others, who will show you:

  • The benefits to renting long term…
  • What to look for in renting a property (whether for short- or long-term use)…
  • Understanding rental contracts (and the sometimes surprising obligations of tenants) in a foreign country…
  • Where to start your search for a rental property (and why and how to take your search local)…
  • What you need to know about buying property overseas (including the pitfalls and how to deal with them)…
  • 12 critical questions you should ask before buying real estate in a foreign country…
  • How to protect yourself as a buyer in a foreign market…
  • How to evaluate a selling price in any given market…
  • How to structure foreign property ownership…
  • How to address the tax implications of owing real estate in a foreign country…

#3: How long can I stay legally?

In considering where in the world you’d like to retire–whether part- or full-time–there’s one critical issue (easy to overlook in the excitement of this new adventure) that can be a deal-breaker in some situations: residency. And not just full-time residency…but what if you want to be able to stay three or six months a year, every year?

In these days of tightening immigration controls and rising visa costs, not everywhere may suit your particular requirements. And let’s not forget countries where, as a qualified retiree, you need to show a minimum monthly income (or have a certain amount deposited in a local bank).

That said, some parts of the world welcome expat retirees with open arms. These places recognize the advantages to the local economy of having foreigners around–and often have special incentives to attract the “silver-haired” crowd.

In Workshop #3: Visas and Residency, we’ll show you the good, the bad, and the ugly of establishing a physical presence overseas. From this important session, which will be led by Lief Simon and Lee Harrison (both with long experience establishing residency in different countries) and supported by attorneys from key jurisdictions who specialize in helping foreign retirees establish legal residency, you’ll learn:

  • The three most retiree-friendly countries in the world (in these places you can look forward to generous discounts–often as much as 50%–on goods and services from restaurant dinners to dental work to your airline tickets)…
  • The fast track to permanent residency in the world’s six top retirement havens…
  • How residency affects your tax burden (and how you can help minimize this through careful planning)…
  • The benefits of using an attorney to guide you through the application process (frankly, we don’t recommend you go any other way)…
  • Easy immigration: Places you can easily (and legally) stay long-term on a tourist (or other short-term) visa…
  • The “no complications” approach: Divide your time among three or four locales a year, and you can avoid jumping through time-consuming residency hoops…
  • The implications of establishing residency in a foreign country (for example, how local inheritance laws may affect your estate)…
  • The many benefits of second citizenship and how to obtain it legally…

Establishing legal foreign residency is one area where you can benefit enormously from reliable local legal counsel. In the workbook for this workshop, therefore, we’ll provide you with contact details for trusted attorney and immigration contacts in our top recommended havens.

#4: What if I can’t afford to give up my job just yet?

What if your retirement nest egg isn’t big enough to support your full-time retirement yet (or maybe you don’t have any nest egg at all)? That doesn’t mean you can’t make your move. It just means you need to think about how you might earn an income overseas.

You aren’t going to get a job in a foreign country (not easily), but the opportunities for starting your own business (big or small) in many of the countries we’ll introduce to you are many.

In Workshop #4: Funding Your New Life, three of the most successful expat entrepreneurs we know will walk you through your best options for starting an Internet business, a laptop-based business, or a bricks-and-mortar business.

Some of these options could be pursued from anywhere in the world, meaning you could start an income-generating business at home now and take it with you when your move…whatever works for your situation.

I’m not talking about any “get rich quick” schemes. Running your own business is not all fun and games…and running any business in a foreign country comes with particular challenges. I speak from many years of personal experience. The bonus is that it’s all on your own terms…

It’s up to you how many hours you work, where you work from, how big you want your business to grow.

If you need to support yourself financially while overseas, or would like to have an extra income, or operate a business as a hobby on the side, then this important session will be of great interest. You’ll learn:

  • How to generate business ideas–and find a profitable market…
  • How to select your products. In the import/export business, for example, certain products have restrictions depending on where you send them to/from…
  • How to get started. You have a great idea…but you don’t know where to begin. Follow the 6-Step Internet Business Start-up Plan to get up-and-running anywhere in the world…
  • Making money on the web: 7 strategies for drawing qualified prospects to your website…
  • Countries among the top retirement havens that make sense for running a business…and those that don’t…
  • Where to find supporting staff. Depending on the size of your business, it may be helpful to have some in-country assistance. You’ll find out the best countries with a reliable, English-speaking labor pool (and minimal red tape in the hiring/firing process)…
  • Legal and taxation issues you need to be aware of running your Internet business…
  • Recommended software tools and online resources to help get you started in your new career…

#5: How will a move overseas affect my tax burden?

Maybe not at all. Depending on where and how your income is derived, retiring overseas could be a tax-neutral event for you. But you want to understand the implications up front, certainly before you’ve made your move.

In Scottsdale next month, the most expert international tax experts we know, including Lief Simon and Joel Nagel, will walk you through everything you need to know about managing and mitigating your tax burden as a foreign retiree anywhere in the world, including (and perhaps especially) as an American retired overseas.

Frankly, depending on your situation, the expertise you’ll have access to in Workshop #5: Taxes for the Foreign Retiree could alone be worth the cost of participating in the event. Especially when you remember that all our assembled international tax experts will be available for personal consultation throughout the three days of the event.

#6: What sort of health care (and insurance options) can I expect overseas? And at what cost?

With few exceptions, your U.S. health insurance and your U.S. Medicare won’t travel with you beyond U.S. borders.

The good news is that you have very good and very affordable options, depending where in the world you’re thinking of settling.

Workshop #6: Health Care for the Retiree Abroad has a double agenda: First, to help you understand what you can expect of health care in a foreign country; second, to present your best options for health insurance coverage.

This important workshop will be led by expats with broad and diverse experience using medical services in different countries around the world and who have taken very different approaches to health insurance (including opting for no insurance at all). These expats will speak from firsthand experience about:

  • Which of the top 20 retirement havens stand out in terms of high-quality health care. (In Buenos Aires, Argentina, for instance, you can arrange a manicure or pedicure in the maternity ward of the hospital.)…
  • Where, among these top havens, you’ll find health care to be the most affordable. (In Kuala Lumpur, Malaysia, a coronary bypass operation at a private hospital costs around US$10,000–less than 10% the cost of having the same procedure carried out in the United States)…
  • The differences between public and private health-care systems (would public care, often available at very little cost–even free–make sense for you in the country where you’re considering retiring?)…
  • Your top options for medical insurance abroad (and the pluses and minuses of each)…
  • The points to consider in choosing a policy that suits your specific needs…
  • Why you should never buy insurance online (at least not until you’ve confirmed the answer to this all-important question)…
  • What your overseas health policy should cover…and what it likely won’t…
  • How to choose among policy options…
  • How much deductible makes sense given where you’ll be living and your personal health circumstances…
  • Cost details for sample insurance plans in a number of overseas retirement havens…
  • What to do if you’re over age 63 (the cut-off age for starting a plan in many countries)…
  • The best international health and travel insurance policies on the market today…
  • Where to go for quality long-term nursing care at a very affordable cost…

#7: How do I manage all the administration of establishing a new life in a new country?

Administration isn’t my thing. I admit it. That’s why I’m very fortunate to have three administration pros on my team, three guys who thrive on spreadsheets and efficiency, three guys who can answer every how-to question related to moving and living overseas based on real-world, firsthand experience. For example:

  • Will I need a new driver’s license? How will I get one?…
  • What are the requirements for opening a bank account in a foreign country? (Part of the answer, of course, is that it depends on the country…and the bank.)…
  • How will I pay my bills (both locally and any that might remain back home)?…
  • How should I organize my household for shipping–and what do I really need to take with me overseas? Should I ship my car?…
  • What is the most cost-effective way to stay in touch with friends and family around the world?…
  • Can I receive my monthly Social Security payment in my new country of residence?…
  • Will my cell phone from home work in my new country?…
  • What’s the most cost-effective way to move money from one country to another?…

In Workshop #7: The Nuts and Bolts of Getting Established Overseas, we’ll address all of the nitty-gritty issues associated with making a move overseas, with the help, again, of expats who’ve learned the best ways the hard way–from real-life, real-world experience.

Kathleen Peddicord

Continue Reading: Retirement In Uruguay Versus Retirement In Ecuador

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About Author

Kathleen Peddicord

Kathleen Peddicord is the founder of the Live and Invest Overseas publishing group. With 30 years of experience covering this beat, Kathleen reports daily on current opportunities for living, retiring and investing overseas in her daily e-letter. Her newest book, "How To Buy Real Estate Overseas," published by Wiley & Sons, is the culmination of decades of personal experience living and investing around the world.